If you ask 10 relatively politico-economically literate individuals what NATO is, it is quite probable that 8 or 9 will know. Ask the same people what the SCO is and more likely than not, you’ll be on the receiving end of 10 shrugs. Yet despite its less than stellar notoriety outside diplomatic circles and despite the list of member nations not being the epitome of exclusivity (other than China, India and Russia that are undoubtedly major geopolitical players, the other countries are Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Pakistan), the SCO (Shanghai Cooperation Organisation) is actually the world’s #1 regional organisation.
Also colloquially referred to as the “alliance of the East” due to its influence in Asia, the SCO accounts for 3/5 of the Eurasian region in terms of size and roughly 50% of its population. Founded back in 2001 in Shanghai, China (who would have thought?) with a grand total of six members (China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan), it was meant as the successor of the Shanghai Five group, funded in 1996 by five of the previously-mentioned six nations (with Uzbekistan being the notable absence).
Its goals pertain to the security, political as well as economic interests of its members, a grand total of 8 states at this point, after India and Pakistan joined in 2017. Aside from these countries, there are also observer nations (in alphabetical order: Afghanistan, Belarus, Iran and Mongolia) as well as so-called dialogue partners (once again, in alphabetical order: Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey).
Why should observers of the Chinese economy care about the SCO?
Aside from its territorial and population-related reach, it represents something toward which other nations can and do gravitate when the right politico-economic conditions manifest themselves. The most textbook-like example in this equation would be Turkey, a NATO member as well as EU membership candidate that has recently expressed its interest in taking the proverbial foot off the pedal when it comes to its existing ties (especially EU ones) and gravitating toward SCO members instead.
In an ever-changing geopolitical landscape, understanding that “status quo” entities such as the EU and NATO are not the only game in town is paramount. Whether or not the implications of this are positive or negative remains to be seen, what matters is that the status of the SCO as a potential point of interest reflects today’s geopolitical reality.
To that effect, several countries have applied for observer status, specifically Armenia, Azerbaijan, Bangladesh, Nepal, Sri Lanka, Egypt and Syria. Others (Israel, Ukraine and Maldives) have formally requested to become dialogue partners. Other nations are still at the stage where they more or less informally express interest, with Bahrain and Qatar doing so when it comes to the idea of becoming full-fledged members and Iraq manifesting its interest in becoming a dialogue partner.
When it comes to the actual scope of cooperation, the security/military goals of the SCO primarily revolve around regional situations such as separatism and terrorism. Politically-speaking, the SCO aims to facilitate the transition to a multi-polar world (or, to put it differently, away from the Euro-Atlantic status quo) and economic incentives (especially on China’s end) are provided to that effect. On the economic front, however, it is worth noting that three SCO members are also members of the Russia-led Eurasian Economic Union: Russia, of course, Kazakhstan and Kyrgyzstan.
As such, while there may be concerns with respect to future misalignments of interests as far as let’s say the SCO and the Eurasian Economic Union are concerned and while Western nations are obviously not exactly thrilled by the growing influence of non-Euro-Atlantic alternatives, it is impossible to hide from the fact that the Shanghai Cooperation Organisation’s influence has grown tremendously over the years and not including it in the geopolitical dimension of your economic analysis with respect to China and the entire region would be a strategic mistake.